Hate to say it but that BOGO chart is just not looking good as BOGO has been down nearly 30% in last 3 months ending at +165. Clearly FAME0 in Northwest Europe is trading much too high at +410 over ICE Gasoil while RME/F0 spread is not even $10/mt. Couple of comments to make here is that Big crops get bigger - Argentina crop will be 51 mil MT ++ with nearly 5.5 Mil MT of Soyoil to export. The Renewable diesel ramp up in the US has not been supportive for soy oil in last couple of months with record UCO and Tallow imports and lower soy oil use that has sent US crushers into a panic. RD over-production in the US is now pushing residual plants to rethink strategy and today VERTEX Energy in their earnings call has decided to return their RD facility to fossil fuel cracking. This will probably not make a big difference in the RVO balance sheet. Biodiesel crush is simply too profitable for RD producers with screen gross margins up 44% in the last 3 months. RD is simply a magnet for feedstock from all over the world crowding out Europe perhaps explaining why spot F0 in Europe is trading at $245/mt premium to BOGO. Whilst UCO, Tallow and Canola is heading to US, we note that US exports of Soybeans are extremely low with 0 (zero) shipments to China while China imported a record amount from South America in Apr at 8.57 Mil MT. The consequence of this is that US crushers are now left with more beans to crush than they would have expected. It also explains their panic despite still healthy front-end crush margins of 47/mt that will surely insure plenty of soyoil supplies. Therefore expect RVO (Renewable Volume Obligations) to be largely exceeded and RINs should confirm this by breaking the 40 c/gal support soon and head to a more realistic 25 c/gal value by end of Sep.
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